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Differences between Buying and Renting

May 27, 2008  |  Difficulty: Easy

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Are you in limbo between continuing to rent and transitioning into to buying? Well this section can help you. Take note of the key differences between buying and renting, and then decide for yourself what is best for you.

The Renting Life

Ahhh, renting, seems like you are free to do whatever you like. You are not bogged down into an extremely long contract. When you are ready to up-root and move you can do so. You don’t have the responsibility of taking care of major maintenance issues, and all you really have to do is mow your own lawn. Need paint, a new roof, a new sink? Well, call the landlord. The stress is off of you. 

Even though less responsibility is involved when you rent, you miss out on some of the key financial benefits of owning a home. There are no tax benefits when renting, but this is what you will get for having a home mortgage. In the end, if you own a home you will get a tax break for the mortgage interest that you pay. Less tax is definitely a good thing.

When you rent, you are not building any equity. What you are doing is giving money each month in exchange for a place to live, and that is it. On the other hand, when you pay your home mortgage you are building upon savings. When your payment plan is paid off, you officially own a very valuable property. You just don’t get that when you rent.

Everything can be perfect when you rent, and then you get the frustrating letter that your rent has been increased. What can you do about it? The answer is nothing. A person who owns their home can secure their mortgage for up to 10 years. But a renter can go through rent increases every year. Basically, a person who owns a home can enjoy more pocket change as income goes up, and mortgage stays the same.

The Home Owning Life

Yes, you are set up to have some great financial benefits, but owning a house isn’t a vacation, there is challenge and work involved.

There is no shaking the responsibility on the landlord when you own your home; you will need to handle all of the maintenance work. But if you don’t like the idea of being responsible for your own lawn, you can choose to buy a condominium, where the outside work will be handled.

You will also have to pay property taxes, you don’t have to really worry about this extra cost when you are renting. It is good to know that most landlords cover this cost by adding it on to the monthly rent statement. So, a renter might be paying for property taxes, but just do not realize it.  

Most homebuyers don’t want to think of this, but if anything goes wrong after your purchase, there is a chance that you can lose your property putting it into foreclosure. This isn’t likely if you have your finances intact, but it is a possibility. If you are a pick-up-and-go type person, home ownership keeps you grounded. You can’t move on a whim, you must sell your house first.

What is listed above can be seen as the downside of home ownership, but we all know that there are some really good things that come with buying a new home. You build equity, this means that your property increases in value as you pay off your mortgage. You have zero equity when renting.

When you buy your home it is yours. This means that you can renovate and decorate when you feel the need to do so. You do not have to have permission to paint or remodel. You can work on your own timetable; if something needs to be fixed you can handle it in a manner that you think is best.

There are tax benefits when you own a home. Many homeowners are able to subtract the interest cost of their mortgage from their taxes. Overall, you are saving a good deal of money. Renters do not have this privilege.

You are not able to pick-up-and-go when you own a house, but some may view this as a good thing. Home ownership gives you a stable property and a community where you and your family can feel at home.

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